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Ministry of Health improves contracting practices

10 February 2006

Ministry of Health improves contracting practices

Fifteen out of 17 recommendations in an Auditor-General report into Ministry of Health contracting practices are already being implemented, the Director General of Health Karen Poutasi says.

The progress follows the release of the Auditor-General report last December into the Ministry's contracting with Allen and Clarke Policy and Regulatory Specialists, over the period 2001-2005.

It made 17 recommendations for improving the Ministry's contracting practices.

"Only two of the recommendations are still being planned. The remaining 15 are either in progress (12%), completed (29%), and 47% have been put in place with ongoing work programmes," Dr Poutasi says.

Work on the final two recommendations, that are currently in the planning phase, is expected to be implemented this year.

The challenge for the Ministry is turning the development of policy into everyday practice given the huge range of contracting activity undertaken.

"The Ministry has improved contracting and internal processes by setting up in 2003 an internal contract management project. The Enhancing Contracting Practices project included a major review of contract management policy and procurement," Dr Poutasi says.

"A number of changes have already been made to improve the management of contracts, particularly in monitoring, but also in updating our Buying Goods or Services Policy, and these were noted in the Auditor-General's report."

A new internal Contracting Support Office, which focuses on procurement and contract management procedures and processes, is now up and running. And staff involved with procurement receive training about the Ministry's expectations for contract management and monitoring, and possible conflicts of interest.

Specific training courses were developed and trialed during 2003 and began running in March 2004. Briefing sessions on the updated Buying Goods or Services policy are currently being run and new extensive training courses are being planned for this year.

In addition, the internal audit programme for the 2005/06 financial year is examining how the contract monitoring policy is being followed in practice, Dr Poutasi says. The Ministry has established an internal advisory group as a way of continuing to review the implementation of the policy.

The Ministry has made steady progress over recent years towards making improvements to its contracting policies and procedures.

A finding of the report was that Ministry processes were not always documented in a way which collated all the relevant information in readily accessible files. This will be made easier with the Ministry's plans to develop a new expanded electronic filing system for contracts, Dr Poutasi says.

The Ministry will continue to provide progress reports, she says.

Copies of the Ministry of Health report to the Minister of Health are available at:


Lucy Taylor Media Advisor Ministry of Health 04 496 2067 027 207 1406

Key activities the Ministry has put in place to improve its contracting processes since 2002 include:

-An audit of non-departmental contract monitoring and performance was started in 2002 and completed in August 2003.

-The Ministry completed competency standards for contracting in December 2003.

-The formal staff training programme on contract management was launched in March 2004 and over 400 staff have completed the training.

-Comprehensive guidelines for non-departmental contracts were developed in March 2005.

-A review of drafting processes for contracts was completed in July 2005.

-All procurement and contracting policies, procedures and guidelines have been reviewed. Contracts involving both departmental and non-departmental expenditure are now covered by one set of standards. The integration work was completed in 2005 and the updated policy was released by the Director-General of Health to the Ministry in December 2005.

-A framework for ongoing stewardship and coordination of contract management processes has been put in place. This includes the establishment of a Contracting Support Office and an updated Buying Goods or Services policy.

-Project work around improving contracting has been transferred into the newly formed Contracting Support Office so that the progress that has been made will continue and have a clear profile within the Ministry.

-Briefing sessions on the updated Buying Goods or Services policy are currently being run in the Ministry for all contracting staff. A new training position has been established in the Contract Support Office, and that person will be responsible for reviewing staff training in contract management. This includes training staff around the Code of Conduct and new Conflicts of Interests Policy, and the implementation of the Buying Goods or Services Policy.

-Scoping and planning work is underway to ensure documentation for contracts is electronically accessible to contract managers.

-Scoping and planning work is underway for an electronic procurement and contracting system for departmental expenditure. This work is expected to be completed by the end of 2006.


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